1. Generally there is no obligation to provide (or request) a reference
The general rule is that employers are neither required to request a reference for a prospective employee, nor to provide a reference for a former employee. However, employers should be wary of refusing to provide a reference for an employee they are in dispute with, since in certain cases (such as discrimination and whistleblowing) the former employee could allege that this is an act of victimisation or detrimental treatment.
2. Conditionality of job offers and employment
It is common to make job offers and ongoing employment conditional upon the receipt of satisfactory references. This is to avoid a potential breach of contract if the contents (or lack) of a reference results in the withdrawal of the offer of employment, or dismissal (if the employee has already started work).
3. Areas of potential liability to the subject of the reference
If you do provide a reference, then be aware that you owe the subject of the reference a duty to take reasonable care to ensure the information it contains is true, accurate and fair. If this is not the case, the subject of the reference could have potential claims for defamation, malicious falsehood, negligent misstatement, or breach of contract. As a result, it is extremely important to check any facts you are planning to include in a reference.
Be careful making comments regarding the subject’s performance, attendance or sickness absence if there is any risk that this could be considered to be disability discrimination. If negative comments are made, this could also constitute victimisation (if, for example, the subject has made allegations of discrimination), or detrimental treatment where the subject has blown the whistle.
If you receive a reference referring to a claim for discrimination, and you withdraw the offer of employment as a result, this could also constitute victimisation.
4. Liability to the recipient of the reference
If you provide a reference, you owe a common law duty of care to the recipient. If the reference is misleading (for example making positive statements about performance, without mentioning an instant of misconduct) and a prospective employer relies on the reference, then you could be liable for negligent misstatement. You should bear this in mind if a departing employee is trying to agree a favourable reference as part of a settlement deal.
5. Vicarious liability
Even if an employee gives a reference for the employer without having authority to do so, the employer may still be held vicariously liable if the reference has been given negligently.
It is common for employers to include a disclaimer of liability in their references – the case law sets out that this is effective in relation to liability for negligent misstatement to the recipient of the reference. However you should still proceed with caution even if you have included such a disclaimer because you could still be liable to the recipient of the reference for deceit. In addition, without prior agreement to the disclaimer from the subject of the reference (which is unlikely to be forthcoming, and is in any case subject to the normal rules regarding unfair contractual terms) you will still have liability to the subject of the reference.
As a result of the various risks set out above, it is now common practice to provide a standard reference containing only dates of employment and position(s) held for all employees – even where employees have departed on less than amicable terms. These are normally provided with the inclusion of appropriate disclaimer wording.
[NB: Please note that this article does not cover regulatory obligations, such as those for PRA and FCA regulated individuals and firms. Guidance about regulatory references can be found here:]